Correlation Between INTERCONT HOTELS and Deutsche Wohnen

Can any of the company-specific risk be diversified away by investing in both INTERCONT HOTELS and Deutsche Wohnen at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining INTERCONT HOTELS and Deutsche Wohnen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INTERCONT HOTELS and Deutsche Wohnen SE, you can compare the effects of market volatilities on INTERCONT HOTELS and Deutsche Wohnen and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in INTERCONT HOTELS with a short position of Deutsche Wohnen. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERCONT HOTELS and Deutsche Wohnen.

Diversification Opportunities for INTERCONT HOTELS and Deutsche Wohnen

0.31

Correlation Coefficient

INTERCONT HOTELS  Deutsche Wohnen

Weak diversification

The 3 months correlation between INTERCONT and Deutsche is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding INTERCONT HOTELS and Deutsche Wohnen SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Wohnen SE and INTERCONT HOTELS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on INTERCONT HOTELS are associated (or correlated) with Deutsche Wohnen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Wohnen SE has no effect on the direction of INTERCONT HOTELS i.e., INTERCONT HOTELS and Deutsche Wohnen go up and down completely randomly.

Pair Corralation between INTERCONT HOTELS and Deutsche Wohnen

Assuming the 90 days trading horizon INTERCONT HOTELS is expected to under-perform the Deutsche Wohnen. In addition to that, INTERCONT HOTELS is 1.27 times more volatile than Deutsche Wohnen SE. It trades about -0.24 of its total potential returns per unit of risk. Deutsche Wohnen SE is currently generating about 0.2 per unit of volatility. If you would invest  2,260  in Deutsche Wohnen SE on March 29, 2025 and sell it today you would earn a total of  110.00  from holding Deutsche Wohnen SE or generate 4.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

INTERCONT HOTELS  vs.  Deutsche Wohnen SE

INTERCONT HOTELS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in INTERCONT HOTELS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, INTERCONT HOTELS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Deutsche Wohnen SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Wohnen SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Deutsche Wohnen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INTERCONT HOTELS and Deutsche Wohnen

The main advantage of trading using opposite INTERCONT HOTELS and Deutsche Wohnen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERCONT HOTELS position performs unexpectedly, Deutsche Wohnen can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Deutsche Wohnen will offset losses from the drop in Deutsche Wohnen's long position.

The idea behind INTERCONT HOTELS and Deutsche Wohnen SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.